The keys to the millionaire transfers from Corfo to the Chilean Treasury that complicate matters for Mario Marcel and the director of Budgets

The Finance Minister of Gabriel Boric's Government, Mario Marcel, and the Director of Budgets, Javiera Martínez , key pieces of the left-wing Administration, have had to give explanations in Chile for asking the Production Development Corporation (Corfo) , the agency in charge of promoting production in Chile, to transfer 3.4 trillion pesos - equivalent to 3.5 billion dollars - to the Treasury to finance the State between 2023 and 2024. It is a controversy that has marked the Chilean February, when the main ministers, and the president, take a few days of summer vacation.

It is not an illegal action, but it is unusual. Previous administrations in Chile did it, such as during Sebastián Piñera's second term (2018-2022), when the then Minister of Finance, Ignacio Briones , requested 1,000 million dollars from the agency to deal with the Covid pandemic. The criticism has come, precisely, for using the money of the organization led by its vice president, José Miguel Benavente, which promotes the development of industries such as green hydrogen and lithium, without there being a crisis or an extraordinary event in the country during that period, from 2023 to 2024. According to the media The Clinic published on February 18, which revealed the millionaire transfers, in the minutes of the corporation it is stated that Minister Marcel indicated that the resources were necessary because the level of indebtedness of the Executive was "full."

The opposition is considering promoting an investigative commission in Congress, when parliamentary activity resumes in March. In addition, deputies from Chile Vamos, a coalition of the traditional right and the Republican Party, of the extreme right, have asked for Martínez's resignation. But the government, which has been criticized on other occasions —particularly the head of Dipres— for errors in calculations and overestimation of income, is trying to downplay the controversy. The Minister of Economy, Nicolás Grau, refers to an “artificial controversy” and that everything has been done in a “totally regular and transparent” manner.

The case has damaged Marcel's image, who at the end of January was the protagonist, together with the Minister of Labor, Jeannette Jara, of the approval in Congress of the historic pension reform . However, the Cadem survey this Sunday, which measures the pulse of Chilean politics weekly, showed the lowest approval of the minister in his administration, which fell from 55% to 45%.

These are some of the keys to understanding the corporation's multi-million dollar transfers to the Public Treasury.

The role of Corfo in Chile

Corfo was created in 1939 to promote industrialization and the development of all productive sectors in the country, after the Great Depression of 1929 , which originated in the United States and hit Chile hard. It has participated in the creation of state-owned companies such as the National Petroleum Company (Enap), the National Electricity Company (Endesa), the National Sugar Industry (Iansa), Laboratorio Chile, the multinational Compañía de Ácero del Pacífico (CAP), among others. It is also responsible for implementing projects, programs and strategies related to entrepreneurship, innovation and competitiveness.

But one of its most recent pillars is the development of a new industrial policy, which includes the national lithium policy presented by Boric in 2023, which incorporates different stages of the value chain, and the development of green hydrogen.

The debt argument

In the midst of summer vacations in Chile, Minister Marcel interrupted his break to give answers to the press at an improvised conference in Santiago on February 20. Accompanied by the head of the Dipres, the head of the fiscal portfolio said that these disbursements avoided increasing the indebtedness , the increase in interest payments and a deterioration in the fiscal patrimony. “If instead of transferring from Corfo, the Treasury had borrowed the same amount in 10-year bonds, what would have happened, first, is that the public debt would have increased by a little more than 1% of the product. That is, instead of being 42.3%, it would be 43.3%,” said Marcel.

In 2023, Boric promised that the revenue generated by his national lithium strategy would be saved and invested: “We will be responsible with public finances. For this reason, following the recommendations of the Autonomous Fiscal Council, a rule will be generated that defines a spending threshold for lithium income." Corfo increased its property income from contracts for the exploitation of the metal in the Salar de Atacama with the companies SQM and Albemarle, collecting additional income of 5.4 billion pesos between 2022 and 2023.

The Comptroller's investigation

Although part of these resources, equivalent to 4.5% of the country's budget for 2023, came from the surpluses generated by the exploitation of lithium, in November of that year the Treasury requested a new transfer of 1.5 billion dollars, which were obtained with the sale of Corfo's financial assets. And that is where the debate has focused, on whether this transfer of resources generated possible financial damage.

For Eduardo Bitran, vice president of Corfo between 2014 and 2018 during Michelle Bachelet's second term, there is no doubt that this operation significantly reduces the corporation's assets. On his LinkedIn account, he wrote that he finds it "worrying" and recalled that these transfers of resources have been made in the last four administrations for different amounts, and by determination of the Treasury. He points out that this would have affected in the medium term the institution's capacity to fulfill its role of promoting investment and innovation through various financial instruments, such as guarantees for financing for small and medium-sized companies or clean technology projects, venture capital, lines of financing, among others.

According to a public statement by Corfo, the transfers requested by the Treasury affect only a part of said extraordinary income: “It is essential to emphasize that the liquidation of investments that was necessary to comply with the aforementioned transfers was carried out gradually and strategically, as agreed by the Board of the Corporation. This allowed avoiding capital losses in said operations, thereby addressing the concerns that this administration raised with the Board, duly fulfilling the duty to safeguard the assets of the institution.”

The agency says that after these transfers were made, at the end of the 2024 fiscal year, Corfo's assets allocated to investments in the financial market exceeded 1.5 billion dollars, levels much higher than those registered before 2022, close to 160 million dollars. Meanwhile, the Comptroller General of the Republic has opened an investigation to clarify the destination and use of the transferred funds, and to detect whether there was any financial loss.

International credits

While Corfo was transferring funds to the Public Treasury, it also requested international loans that reached an amount close to 1 billion dollars from the Inter-American Development Bank (IDB), the World Bank, the CAF and two other European banking entities, to obtain financing for its projects, according to the Ex-Ante site and as shown on some of the financial organizations' websites. In the case of the IDB, the $400 million loan was approved in June 2023. A press release from the international organization states that it was granted to "support the development of the green hydrogen industry and its derivatives in Chile."